24983003 Marketing of Services
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Transcript of 24983003 Marketing of Services
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Shrikant Kulkarni
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Services
y Activity or benefit that one party can offer to another
that is essentially intangible and does not result in the
ownership of anything. Its production may or may not be
tied to a physical product.
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The Problem of Service
Innovation
y
modern economies are both serviceeconomies and economies of innovation.
Paradoxically, they are not regarded as
economies of innovation in services... It is as
ifservice and innovation were two parallel
universes that coexist in blissful ignorance of
each other.
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Services - Featuresy Intangibility
y Hard to grasp, concept is abstract
y Customer is unable to experience the product prior to
purchase
y Dramatization often necessary for concept
y Perishability
y Services cannot be stored or held in inventory.
y If not used when available, they go to waste.
y
Inseparabilityy Outlet accessibility can limit the area covered by the service.
y Image is important: Image affects the perception of the service.
y Consumer is present when service is produced.
y Hard to separate the service provider and the service
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Services - Features
y Variability
y Service quality tends to vary considerably.
y Difficulty in establishing consistency in quality
y across Providers or within providers
y across Time
y across Delivery Centers
yNon-inventorability
y Heterogeneity
y Simultaneity
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provide consumers with products /services at the lowest
total cost
product line offered to consumers is standardized and
limited
Products / services are highly reliable
customer service pursues the highest level of convenience
there is a high level of teamwork among employees in these
firms
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yTailor offerings to meet individual needs
y Success through an increasingly fine understanding
of exactly what each customer needs and the ability
to deliver exactly these services and products
y Products / services are highly diverse and configured
y customer service pursues the highest level of
intimacy
y
If there is potential for long term growth, eachcustomer representative has wide latitude to meet
individual client needs, regardless of short term costs
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Attempts to provide a steady stream of cuttingedge solutions
Willing to invest in high risk/high reward
ventures within narrowly focused areas of
expertise
products are narrowly focused, but very cutting
edge
These firms reward individuals that can seeunique solution opportunities, act independently
to develop unique solutions and bring these
solutions to market
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y Transactional Selling to Consultative
Selling to Enterprise-Wide Selling
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The 7S McKinsey model
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Functions/Uses of7-S-Model
y Used for internal analysis of a company
y Analyze strategic characteristics of a company
y
Tool for determining the do ability of strategiesy Used to create alignment among various departments of an
organization
y Examines effect of change on a company
y Analyze the successful and dysfunctional aspects of anorganization
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Weakness
y Focuses on internal fit of an organization
y Ignores effect of factors external to the
organization
Why 7-S Model
y Profitable, purposeful, efficient organizational
action cannot be successfully executed if internalelements are not aligned
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Essence of the Framework
Hard S - rational and factual aspects: focuses on Strategy,Systems, and Structure.
y Strategy a plan of action to maintain competitive advantage over the
competition. The direction and scope of the company over the long term.
y Systemsmeasures and actions which accommodate the execution of dailyactivities . Formal and informal procedures that govern everyday activity,covering everything from management information systems, through to thesystems at the point of contact with the customer (retail systems, call centresystems, online systems, etc).
y Structure the way the organization is structured, who reports to whom.The basic organization of the company, its departments, reporting lines,areas of expertise, and responsibility (and how they inter-relate).
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Essence of the Framework
Soft S - social and interpersonal behavior: focuses on Style,Shared Values, Staff, and Skills
yStyleThe leadership approach of top management and thecompany's overall operating approach
y Shared Values company culture, work ethics etc ,Ultimately theyguide employees towards 'valued' behavior.
y Staffcompany employees and their capabilities i.e. how they aredeveloped, trained, and motivated.
y Skillscore competencies of the company as well as that of its staff
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Application of the Framework - Strategy
Global strategy Multidomestic strategy Adjust products and
operations according to eachcountryor market served
Standardization ofproducts, processes andoperation around theworld
Source: Strategic Management. Pitt and Lei, 2003
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Application of the Framework - Systems
Web Server
Database ServerApplication Server
Country 1
Country 2
Country 3
These 3 servers represent the USwebsite, ERP, and database server
In each country, a copy of the ERP
is installed with modifications toaccommodate languageA version of the website in each
Country is created and hostedThe local ERP and website use
the local database serverThe local database issynchronized with the central
database server in Boston severaltimes daily.
*Because al l locations use the sameDatabase design and have the same basic
operations th is model becomes highlymodu lar and easy to implement multiple
times.
International
Data Warehouse
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Application of the FrameworkStructure
Geographic Division Structure
y Hierarchical -Two way open communication
y Self contained product/function to meet local
needs
y Promotes a high level of decentralization
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Application of the FrameworkStyle
The competitive executive
y Flexible and adaptive to Stakeholders needs
y Seizes and exploits opportunities
y Focuses on increasing the companys share of
market at a profit
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Application of the Framework-
SharedValuesMaintenance of the firms corporate culture
globally
y Strong work ethics among new employees
y Healthy balance of competitiveness and cooperationamongst applicants
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Application of the Framework - Staff
y Recruitment of new consultants in their respectivecountries
y Attract experienced employees at other firms
y Offer incentives which should be determined by the
culture of the country
y Provide additional training
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Application of the Framework - Skills
Skills for an International Market
y Communication, Administrative, Finance and Accounting,Customer Service, Marketing, Product Development, IT
y High Level of linguistic capabilities
y Examine foreign recruitment opportunities
ySeek the best job techniques for individual countries
y Exposure of US based consultants to the globalmarketplace
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Globalization of services
y The pace of technological change in ICT in recent years has led torevolutionary changes in the processing and dissemination of data and to theemergence of an information society.
y The combination of information technology and telecommunicationstechnology has greatly enhanced existing service industries and has led to aspin-off of numerous new ones.
y Many different services can be provided through a single network; a givenservice can be provided through multiple networks using different
technologies.
y Competing in a flattening world.
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Knowledge Servicesy
Adding high value through advanced analytical and technical skills
This includes:
y Research and work on intellectual property, equity and finance,analytics, market research, clinical research and data managementamong others
y Legal off-shoring services business is also part of this domain. Theseservices could include the entire spectrum of work related to intellectualproperty from preparing patent applications to IP commercialization
y Outsourcing engineering and design work involving plant design, chipdesign, and animation.
y Judgement-based work in education and publishing businesses, medicalcontent and services
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Gap Analysis
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Gap Analysis
y Gap analysis is a survey instrument used to determine the gaps
between a service offered and a customers expectations.
y Gap1: Customers expectations versus management perceptions
y Gap2: Management perceptions versus service specifications
y Gap3: Service specifications versus service delivery
y Gap4: Service delivery versus external communicationy Gap5: The discrepancy between customer expectations and their
perceptions of the service delivered
y Gap6: The discrepancy between customer expectations and employees
perceptions
y Gap7: The discrepancy between employees perceptions andmanagement perceptions
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SERVQUAL
y
The marketing research team of Parasuraman, Zeithamel,and Berry created this service quality measuring tool in
1988
y The instrument can enable organisationsy To identify and understand where service gaps exist within the organisation and
between the organisation and its customers
y Prioritize those gaps in terms of relative impact on quality of service
y Identify the reasons for the existence of those gaps
y Develop a programme of activities to close those gaps
y Implement an appropriate set of processes to continuously review and refine
customer service quality
y SERVQUAL is not a measurement to compare and rank separate companies
but only to provide a measure for managers to determine actions needed in
their own services
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Five Generic Dimensions of Servqual
y
Tangibles: appearance of physical facilities, equipment,personnel, and communication materials
y Reliability: ability to perform the promised service
dependably and accurately
yResponsiveness: willingness to help customers and
provide prompt service
y Assurance: knowledge and courtesy of employees and
their ability to convey trust and confidence
y Empathy: the caring, individualized attention the firmprovides its customers
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SERVQUAL Applications
y SERVQUAL is widely used within service industries to
understand the perceptions of target customers regarding
their service needs. And to provide a measurement of theservice quality of the organization.
y SERVQUAL may also be applied internally to understand
employees' perceptions of service quality.With the
objective of achieving service improvement.
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Steps in SERVQUAL Processy
Customers are asked to answer numerous questions withineach dimension that determines:
y The relative importance of each attribute.
y A measurement of performance expectations that would
relate to an "excellent" company.y A measurement of performance for the company in question
y Data is compiled
y Analysis of Data
y Item-by-item analysis
y Dimension-by-dimension analysis
y Overall Servqual Gap
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Customized Servqual Instruments
y IT SERVQUAL
y Developed by Kettinger and Lee in 1994
y
Focused on information service attributesy Consisted of 22 items
y Service oriented IT Servqual
y Modified to incorporate specific service dimension within IT
industry
y 18 important items
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Parasuraman,A.;Berry,LeonardL.;Zeithaml,Valarie A., SERVQUAL: A
Multiple-Item Scale For Measuring
Consumer Perceptions of Service Quality,Journal of Retailing, 1988, 64, 1, 12-40
Axel Hochstein,MANAGING IT SERVICE
QUALITY AS PERCEIVED BY THE
CUSTOMER: THE SERVICE ORIENTED IT
SERVQUAL